British Airways is recognized as one of the largest international airlines of United Kingdom. British isles airways Plc and many other subsidiaries companies make the complete Uk Airways group. Presently, British Airways(BA) protects more than 550 vacation spots. According to the data of the year 2008/09, more than 34 million passengers have travelled through English Airways. United kingdom airways main business working hub location is London's Heathrow airport which serves the business with large physical area. Uk Airways is also outlined in stock market of London. . (Company Information, n. d. ). The following report will analyse and then evaluates both signals of the British Airways ie, financial as well as non-financial by making it compare with the performance of other company, which is Dubai based called as Emirates Airlines. Talking about Emirates Airlines, being launched in 1985 and since that time shown the signs or symptoms as of one of the fastest growing airlines of the world's air travel industry. Currently, the business protects more than 100 different locations throughout the world. (The Emirates Group, 2009). Further in the article the evaluation of the performance of both these companies is being done by using proportion examination and there will also be dialogue about the financial performance trend analysis of both companies in the last few years. This survey will also go through the managerial and non financial troubles faced by both of these companies using SWOT research, and then talking about the obstacles and solutions for those issues. The last section of this record will discuss and analyses the comment by John Rishton anticipated to adoption of IFRS and also go through the distinctions between IFRS and US GAAP.
The pursuing paragraphs will cover the changes and the financial pressures recently confronted by the airline sector. Matching to keynote statement, Factors like increase in the prices of oil during first 50 % of 2008 which critically influenced the operating costs of airlines, then your impact of global recession made the problem a whole lot worse as affecting the number of passengers and so lowered the demand for flights internationally. In response the various airlines companies have abandoned those routes that have been unprofitable and also decrease the un-necessary costs.
In such a difficult period of the flight sector, the firms must understand that how its' customers are rephrasing value and their response in the time of recession, rather than cutting down on the budget that they have designed for the marketplace research. Now we will discuss specifically about the British airways and Emirates airlines, will consider different financial and managerial problems that are faced by the above mentioned two companies. SWOT research is utilized as tool to clarify the difference between your both airlines.
British airways made a strong brand individuality as United Kingdom's leading airlines because of trust and commitment being exhibited by it's customers. Strong brand personal information also brought benefits of economies of range. There has been a fresh subsidiary launched by British airways known as as, Start Skies, which offers only business course for the traffic between U. S and major Europe. British airways has got huge capacity for it's air planes because of it's main operating platform hub ie, at Heathrow international airport and With the suggested merger with Iberia, British airways is looking to become second major flight company after Air France of European countries. British isles airways offers different loyalty programs for it's customers as to be sure the again travel off their airlines only.
On the other part Emirates air travel has made it's brand strong available on the market using different adverts and many sponsorships. One of the main advantages of emirates flight is having its' focus on varied market and the entrance in to the cargo shipping proven very good for the company. Emirates air travel has made it's commercial culture by being attentive and discovering the needs of it's customer. Emirates also has low priced, which is around 30% significantly less than its' European opponents. With the opening of emirates terminal 3 at Dubai international airport lately and the ongoing capacity to renew with improvement in the service gives the emirates airline the durability edge over it's rivals. Tim Clark who's the leader of emirates airline, stated that the past results of the airlines have exceeded above expectations despite of the increase in jet fuel costs for emirates airlines from US$1. 68 upto US$2. 78 per gallon by the end of the entire year.
With the opening of new terminal 5 at Heathrow air port by the English airways, the company faced problems with training of personnel, which led in flights being cancelled, complains of absent luggage. Additionally the rising fuel prices led to increase in ticket prices. The slowdown of both the UK and US economies has affected Uk Airways as the company is becoming very vulnerable to financial instability. The bankruptcies in the US banking sector lowered the amount of premium booking individuals in British isles airways intensely. The road of Heathrow and NY is having huge traffic of travellers and varieties an important part of United kingdom airways getting. Therefore, the drop in the bookings of premium class affected the success of the business. United kingdom airways also suffered with increased in non fuel prices like from personnel and the getting charges.
For emirates airlines, there exists some weakness also associated with it, like it is not achieving success in all of it's diversification and strategies, which has emerged as a weakness of the business. Analysts have blamed the company for too much emphasizing on high end acquisitions and diversifications regardless of getting the type of results from such decisions. As U. S is a major market for the airline industry and emirates airline does not cater to many places in the U. S. , which is also a weakness for the business.
If English airways will fully acquire the Iberia airlines with presently 13% talk about, then it'll be in the list of the world's biggest airlines having approximated merged currency markets capitalisation value of EUR 5. 5 billion. There can be an chance for the British isles airways to broaden more in rising markets like Middle East Region, India, and China. Another chance for British Airways is to now improve the operating conditions of its terminal 5 at Heathrow air-port. The business should give attention to lowest cost of travelling to fulfil customer needs. Together with the increase of fuel efficient aircrafts of British isles airways it can decrease the environmental destruction, as cover of environment is surfaced as an important concern across the world. The company also needs to see a pastime of customers towards new places and develop new routes wherever possible.
On the other hands for emirates airline the chance is based on which, it can use it's well developed infrastructure business to go into the new emerging markets where internet adoption is not very well developed. Identical to for the English airways, addititionally there is an opportunity for emirates to present new routes by watching the interest of customers. As also Dubai and the middle-east region is more advancing for tourism and commercial purpose enables emirates airline to grow. Emirate airline will no pay income tax which means this also provides tax gain to it. This will save you around $250 million of money per season. Also credited to close closeness of Dubai from Indian and Pakistan provides chance to the air travel to access greatly available cheap labour. The benefit for cheap labour in the emirates flight can be seen from the physique as from the full total operating budget of the business, the price tag on labour accounts upto 18% which is very less when compared with Lufthansa airline having 27% and united airlines with 29% of cost of labour.
The current danger to English airways is from current economic slowed down, increased fuel prices and weaker pound. The global recession has severely afflicted air vehicles. The travel and tourism industry is moving towards including more renewable practices. There is pressure from EU on all the airlines companies to limit carbon emissions Across European union. After the occurrences of 11 Sept 2001, the security steps have been more tighten by the air travel companies. There is also strong competition from low cost airlines, cruise and rail transport that constitutes a bigger show in travel market. Low cost carriers are increasingly looking for new routes for customers with affordable ticket price. Another matter of matter for English Airways is the trade union electricity. The trade union already have many hits in august 2004 and 2005. Cost of gas is also can be in danger as the politics situation in Iraq is encouraging the climb of petrol prices, which will result in accumulate of another 100 million to the price of British Airways.
Whereas, there exists severe danger on emirates airlines also from it's competition naming Qatar airways and Etihad airways. Due to politics instability in middle-east could lead to have a negative effect on emirate airline. However the cargo commercial and passenger segments of emirates airlines have managed to achieve their focuses on, but increasing olive oil prices affected previous quarter net income. As more desire of item trading affected essential oil prices due to brokers weren't revealing the actual figure of scarcity of raw material.
There are a few of the challenges quit out to be tackle by the BA at the time of developing its weather change program. As the company operate in environment which is uncertain and political environment is merely an integral part of whole environment but it gives troubles like of changing local climate. BA has used various initiatives to face & resolved these challenges from expanding in-depth understanding on how to face these challenges, keeping question with authorities and asking for their co-operation. (Uk Airways SWOT Analysis, 2006).
BA had to handle many risks from competition besides the security risks like following the incidence of 9/11 terrorist invasion, as its been considered as amongst the world most profit making airlines so to allow them to lead the industry the competition becomes more stiff with the they not simply face hazards like escalating gasoline cost but also have to operate with low priced. BA has been helped by keymetric with 2006 transformational online programs to save lots of nearly about 38 a huge number.
Operating profit has truly gone right down to 80 percent which ultimately shows sheer and utmost decrease due to the weak customer assurance and thus reducing the traffic quantities. Troubles are mainly face because of the so many cost which has become hot air balloon and heading high, if busted won't beneficial for the business. The price balloon include so many costs like right from fuel cost, employee cost, cost of anatomist, landing fees and besides this, also contains more procedures costs due to postpone in shifting to terminal 5 like, cargo handling costs, trucking charges, cost of ground accessories, IT and strong euro rate etc. Whereas, Emirates airlines first of all penetrated the market by introducing it' s routes to the places in western world Africa like in Nigeria and Ghana entirely. To sustain into the market and feel the presence in these two countries gleam challenge to have the ability to take care of many multilingual issues and the problems with double byte sites. As emirates is present internationally, to manage it's data which is globally disperse through internet, the business took your choice of spreading out SDL Tridion's content for management solution. With such a conclusion empowered the Emirates, to cater to wider and variety of audience. As now the clients from around the globe can usage of common information open to them. (Simon, 2007)
Aviation industry requires huge sums of investment to operate and it provides risk to the go back as well. The main money source of income for organizations is shareholder. BA secures its position in the world aviation through centering its purpose towards its prospective shareholders and product betterment with handing cost proficiently. BA aims to achieve unique culture in airline by focussing towards customer and their requirements. BA thinks that, differentiating their strategy of their competitors provides the huge market. After being loosed the battle in to the business class which includes been collapsed, after their position has been taken over by Silver Aircraft Airlines as a business class leader. But after this move around in the aviation industry, British Airways took the right decisions like purchasing of Lavion Paris Airline, which was a noiseless successful for BA. British Airways is actually prepared to the change based on the environment which alo shows in their course of prepared action. BA has released the Terminal 5 which was going through good functioning with 6 million passengers (Marzouqi, N. D. ).
Emirates on the other hand, acquired find out a niche for itself as a option for success and not in the way of following others. Unlike BA, emirates had not been very much damaged by 9/11 incident and also with decline of profit levels, seat factors the company managers didn't shake and through their opinion in their company and dedication got them out in such a crisis situation and therefore, they were remained profitable. Whereas, other airlines were minimizing and laying off their labor force in order to cut down the cost but, emirates didn't do this and their unique working paid off. (Sull, 2005)